Hard working families suffering in financial crisis
As a retired council worker I was very happy to demonstrate my support for the strike on July 10 by my former colleagues, who are seeking a pay rise above 1%.
However I didn’t expect Howard Rees, highly respected former IFS economist, to also support their claim. In a report published last week, he concludes that “modest rises” above 1% would benefit the economy.
His report shows us that every 1% increase “generates between £710 million and £820 million for the government in increased income tax, National Insurance contributions, expenditure tax receipts, and reduced benefit and tax credit expenditure”. The cost of lifting the 1% pay cap would be roughly half the amount which is often assumed.
In addition it is also clear from his report that there would be significant social as well as economic benefits.
According to Howard Rees each 1% increase would also pump between £470m and £880m of demand into the economy and generate between 10,000 and 18,000 full-time equivalent jobs, particularly for sectors such as leisure and transport.
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In effect the report argues that removing the cap would, on a wider economic examination, have no net financial cost to the taxpayer but in addition will benefit the economy overall.
It is also important to remember that council workers, teachers and firefighters are taxpayers as well.
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During my 27 years in local government I contributed towards my pension from a deduction in pay. I also contributed through council, income and value added taxation. As a pensioner I am still forced to contribute to my pension scheme through the same forms of taxation, which is not the case for private sector pensioners.
Nor is it the case that life in the public sector is a bed of roses compared to the private sector. That is certainly an outdated image. Since the mid-1980s the public sector has been subject to continuous compulsory and voluntary tendering of services.
As well as the stress and uncertainty this has often created I’ve seen the appalling financial impact this had had on thousands of colleagues who have lost their jobs and pensions in this way.
In reality neither public nor private sector workers are better off than the other. What we should be asking is why it is that those who did most to cause the financial crisis seem to be doing very nicely while ordinary “hard working families” have been made to suffer?
Perhaps one answer is that they have convinced us to point the finger of blame at each other rather than the perpetrators.
Retired UNISON member